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The gross margin declined by 20 basis points because the retail segment took up a bigger percentage of the total sales mix. But operating margins improved 1.5 percentage points as the company leveraged its operating expenses across more sales.

At the end of fiscal 2006, the store count increased to 74 from 59 (net of closings), and management expects to increase square footage by 25% in 2007.

Is dELiA*s set to take on the likes of Abercrombie & Fitch (NYSE:ANF), American Eagle Outfitters (NYSE:AEO), and Aeropostale (NYSE:ARO)? Foolish investors seems to think so, because it's rated four stars in The Motley Fool's CAPS community.

American Eagle Outfitters is a Motley Fool Stock Advisor recommendation. What other stocks are at the top of Tom and David Gardner's list? To see, be our guest at the Stock Advisor website for 30 days.

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